Friday, September 9, 2011

Bear Put Spread (12 Sep 11)

Bear Put Spread (ETFs)

A Bear Put spread is a debit spread created by purchasing a Put with a higher strike price and selling a Put with a lower strike price.  Both options expire in the same month.  This is a bearish strategy and should be implemented when you expect the market to close below the strike price of the short Put option—the point of maximum reward (at expiration).  

EFA  $48.75
Buy to Open (1) Oct 11 54 P @ $6.20
Sell to Open (1) Oct 11 49 P @ $3.10 
Net Debit: $3.10 ($310.00)
Breakeven: $50.90
Max. Profit: $190.00
Pct Return: 61.3% (41 days)

FXI  $35.95
Buy to Open (1) Oct 11 40 P @ $4.55
Sell to Open (1) Oct 11 35 P @ $1.54 
Net Debit: $3.01 ($301.00)
Breakeven: $36.99
Max. Profit: $199.00
Pct Return: 66.1% (41 days)

EEM  $40.01
Buy to Open (1) Oct 11 44 P @ $4.80
Sell to Open (1) Oct 11 39 P @ $1.92 
Net Debit: $2.88 ($288.00)
Breakeven: $41.12
Max. Profit: $212.00
Pct Return: 73.6% (41 days)

XLI  $30.18
Buy to Open (1) Oct 11 32 P @ $2.72
Sell to Open (1) Oct 11 27 P @ $0.64 
Net Debit: $2.08 ($208.00)
Breakeven: $29.92
Max. Profit: $292.00
Pct Return: 140.4% (41 days)

VWO  $41.15
Buy to Open (1) Oct 11 45 P @ $4.80
Sell to Open (1) Oct 11 40 P @ $1.80 
Net Debit: $3.00 ($300.00)
Breakeven: $42.00
Max. Profit: $200.00
Pct Return: 66.7% (41 days)

All positions displayed are for educational purposes only and are not intended to be recommendations.

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